Employers are facing skills shortages that have a direct impact on their bottom line; hiring rates reached new highs this year, and job openings exceeded the number of unemployed workers. Meanwhile, policymakers around the world are concerned that without longer working lifespans to correspond with increasing longevity, financing social protection systems will grow increasingly strained. Yet, neither employer practice nor government policy is catching up fast enough to the realities of increasing longevity. Older workers and jobseekers continue to face significant challenges in the labor market, leading many to leave the workforce earlier than planned. That is a reality that must change—for the sake of not only workers, but companies, governments, and society as a whole. Fortunately, trends revealing this kind of needed change have begun to emerge.
Many older workers in today’s economy want to stay on the job. A higher proportion of the US older population is either working or actively seeking work compared with those of previous decades. By comparison, labor force participation rates among the youngest age segments actually declined during the past three decades. Further, declines in the participation rates of “prime-age” males (i.e., those ages 25 to 54) have occurred at a higher rate in the United States than in other comparable countries and for men at all education levels.
In the coming years, the US Bureau of Labor Statistics forecasts, labor force participation rates will grow fastest among those ages 65 and older. This trend, in fact, is already evident. In 2018, the majority (53%) of baby boomers (born between 1946 and 1964) were still in the labor force. Moreover, the oldest cohort of boomers have stayed in the labor force at the highest annual rate for people their age in more than half a century.
These shifts in labor force participation should be sending a signal to the workplace that older workers are an increasingly important demographic of the workforce. Yet many employers are not heeding that signal. Research shows that age discrimination remains disturbingly common. Sixty-one percent of US workers ages 45 and older have either seen or experienced age discrimination in the workplace. Those who are unemployed are more likely to say they had seen or experienced age discrimination, with 38% of unemployed individuals ages 45 and older believing that an employer did not hire them because of their age. Discouraged jobseekers ages 65 and older are more likely than any other age group to say that they gave up looking for work because employers do not want to hire someone their age. Further, older workers are more likely to experience long-term unemployment, which in turn increases their risk of dropping out of the labor market altogether. When older workers’ jobs are displaced due to company or location closures, insufficient work, or the abolishment of a position or shift, they are less likely than their younger counterparts to find reemployment; as a result, over half of displaced workers ages 65+ quickly drop out of the labor force. Research has also found that over half of workers ages 50 and older were laid off at least once or left jobs “under such financially damaging circumstances” that it is unlikely that they chose to leave voluntarily.
Earlier-than-planned labor market exits can cause significant hardships for individuals and their families. But they also represent a major missed opportunity for employers, who are increasingly facing recruiting and retention difficulties, and skills shortages. Some forward-looking companies and business leaders see opportunity in the growing share of older workers, a multi-generational workforce, and the longevity economy.
Older workers are an important source of skilled labor, and they will only become more important in the years ahead. Along with rising life expectancy, educational attainment changes are the drivers of more than two-thirds of the median increase of the labor supply of older workers in advanced economies between 2002 and 2017; today’s older workforce is more educated than ever and can help mitigate the skills shortages many employers are facing.
An age-inclusive workforce creates strategic advantages for employers. Research has found that age diversity
Given the tremendous value of an age-diverse workforce coupled with the reality of the global aging trend, countries around the world are beginning to respond, developing better policies to improve labor market outcomes for older workers and jobseekers. A recent analysis of OECD countries finds that there are clear steps nations can take to improve prospects for older workers. Countries that perform better on promoting employment for older workers are those that provide strong incentives for workers to build longer careers. Such countries provide better opportunities for older workers while investing more in their employability through training and good quality jobs.
Whether in the U.S. or other countries, employers and policymakers still have a long way to go. Nevertheless, more of them are getting the message that helping older workers is critical to all sectors, from employers seeking to meet business goals to governments that must respond to changing populations. And as a growing number of employers and countries join the movement and accelerate this trend, a roadmap is taking shape.